CSC seeks longer leases in drive to grow rental income
Capital Shopping Centres today posted a 9% rise in NAV for the first half of the year, helped by a 6% increase in the value of its investment properties. Chairman Patrick Burgess said: “We are now looking to drive growth in net rental income from lettings, lease expiries and rent reviews, with a particular opportunity from converting last year’s short-term lets into longer-term lets at higher rents.”
In the first set of results published since the group demerged its non-shopping-centre operations, CSC said net rental income from continuing operations was up 1% with occupancy at 98%. The group, which includes the Lakeside and Metrocentre shopping centres in its portfolio, said footfall in the first half was up 3% year-on-year and 6% ahead of the position reported two years ago.
CSC said that it had the scope through lettings, lease expiries and rent reviews “to capture a 23% uplift from current contracted rents to our valuers’ assessments of ERV,” in particular as a result of retailers wanting high-quality space, which is scarce, and the strong demand for larger units in centres with the best catchments; and by turning temporary lets into longer leases.
“With around £125m of value-enhancing active management projects under consideration and around £500m of potential investment by way of major extensions, the group has significant scope to grow organically without depending on acquisitions,” Burgess added.
